The proposed settlement will benefit fishermen, local residents and clean-up workers whose livelihoods or health suffered in the worst spill in US history following the Deepwater Horizon oil rig explosion in 2010 in which 11 workers died.

Bob Dudley, BP Group's chief executive, said: "From the beginning, BP stepped up to meet our obligations to the communities in the Gulf Coast region and we've worked hard to deliver on that commitment for nearly two years.

"The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast."

US District Judge Carl Barbier, who is overseeing the litigation, said in a court order that the proposed terms of the class settlement would be submitted to court for approval.

He also adjourned the first phase of the trial over the spill, which had been scheduled to begin on March 5. He had previously delayed the start of the trial to allow a group called the Plaintiffs' Steering Committee (PSC) to negotiate a settlement with BP.

The committee represents fisherman and businesses who say their livelihoods were damaged by the April 20, 2010, explosion of the Deepwater Horizon drilling rig and subsequent spill from the Macondo well.

Lawyers for the committee, Stephen Herman and James Roy, said the settlement would compensate hundreds of thousands of victims.

"It does the greatest amount of good for the greatest number of people," they said.

BP stressed the proposed settlement was "not an admission of liability".

A settlement would remove a significant portion of the complex case, but it would not put an end to BP's exposure.

BP still has to resolve claims by the US government, Gulf states and its partners in the Deepwater Horizon project, in which pressure from a well a mile below the ocean's surface blew up a massive drilling rig, spewing oil into the sea for nearly three months.

The money is expected to come from the $20bn compensation fund that it set up following the disaster.